11 Pros and Cons of a Traditional Economy

A traditional economy is driven by agriculture wherever it is implemented. Basically, it is largely shaped by the place’s culture and traditions, often utilizing the idea of bartering instead of currency exchanges. This type of economy is most common in developing countries with emerging marketplaces. While critics say a lot of unfavorable things with this type of economic system, there are also proponents that say some good things that come with it. To get a better understanding of why it is widely used, it is best to explore its pros and cons.

List of Pros of a Traditional Economy

1. It is simplistic.
In a traditional economy, every person has clear expectations of what he is supposed to do and what he can get for what he does. For example, a fisherman would know that he has to catch a certain amount of fish each season to have enough for his family and for trade in exchange of things that he cannot obtain from the sea, such as animal hide. It would be very rare in this system that a son of a hunter would fight to become a fisherman, as everyone has a clear idea of their roles, making for a much simpler life.

2. It is less destructive.
This type of economy is rooted from century-long traditions, where it is considered as the first “green” way to live. Here, goods are not as much produced as they are harvested, and people only take what they need, which means that there will be less impact on the environment as markets tend to be completely self-sustaining. The main objective of this economic system is focused on the basic needs, such as food, water, shelter and companionship, thus it is a more sustainable way of living. Of course, people would be more careful with the planet, considering that they completely depend on it for survival.

3. It promotes a strong sense of community.
With each person having a vital role, producing tight-knit groups, a traditional economy creates a relatively low competition. It encourages everyone to support each other, so selfishness or greed would be very rare. Here, you will see people sharing work load more equally, as everyone has similar goals to survive.

4. It meets vital needs.
While people’s lifestyle in this type of economy may not be glamorous, unlike in other countries, it still does work. As you can see, the people are providing for the basic needs themselves, and leading a wholesome life, they often take pride in the work and place they live in.

List of Cons of a Traditional Economy

1. It is at risk of being overpowered by larger economies.
Often having relatively small-scale operations, a traditional economy is at risk of losing its natural resources to larger economies that want to take them and, worse, leave the land unusable. A good example is the countries in Africa that had traditional economies, where diamond mines were exploited, spoiling the land with pollution and bringing chaos to the region. In most cases, when more powerful entities use the natural resources in traditional economies, they would not only interrupt the way of life but would also leave damage behind.

2. It does not allow change.
As it is typical for traditions to be deeply rooted in this economic system, it tends to strongly resist any form of change, which means that growth of the nation would also be hindered.

3. It only offers a little amount of choices.
Though a traditional economy promotes simple life, it would be based upon one thing—survival. It would seem like a person has to be very aware of surviving every day under such a system, where there is not a lot of choices. If someone in this type of living arrangement does not agree to do what he is supposed to do, then he would be shunned or punished in some way.

4. It lays down a lower standard of living.
As every day is based upon meeting the essential elements of survival and everything is work-centered, there will be very little time for things that bring enjoyment. Basically, the standard of living in a traditional economy is much lower, where homes are typically constructed by hand and most of the members of the family do not own mechanized transports. Moreover, modern conveniences, such as electricity, can even be absent.

5. It gives rise to shortage of population.
People who are living in a traditional economy do not have the power to barter and obtain proper health care, reducing their life expectancy. Not only that, but this disadvantage is making infant mortality relatively high, which consequently creates a shortage in population growth when compared to those in other types of economies. Also, the shortage in population would leave the entire country being less able to defend themselves against invasions by other nations.

6. It risks its people to suffer even from common or curable diseases.
The potential of people living under this type of economy to suffer from very curable disease is relatively large. As you can see, the spread of diseases has been observed to be a common problem because of poor sanitation practices and unavailability of adequate housing to protect people from the elements.

7. It is at risk from unpredictable weather problems.
Mother Nature plays a significant role in traditional economies, as society would be deeply affected by weather conditions, natural disasters and bad crops. Unlike in other advanced economies, farmers who are devastated from losing their crops will not have any safety nets to replenish their finances and keep their families from going hungry. Normally, just one or two unfavorable seasons can make people starve, and there would be no social programs that can help carry them over.

Generally, not many areas of developed countries operate under a traditional economy, but there are small pockets of market employing it all over the world. Many factors come into play when using this economic system, and the best way to decide whether it is best to use in a country or not is assessing its pros and cons first.